California Resources NYSE: CRC reported second-quarter results marked by operational efficiency gains, early delivery of Berry-related synergies, and progress in expanding its midstream, carbon management and power businesses.
President and CEO Francisco Leon said the company’s oil and gas business benefited from strong execution, including drilling efficiency improvements and cost reductions. The company also announced its planned acquisition of Crimson’s California crude oil pipeline platform, a transaction intended to expand its transportation and marketing capabilities.
Second-Quarter Results and Updated Operating Outlook
CRC averaged net production of 149,000 barrels of oil equivalent per day during the second quarter, with oil representing 81% of total volumes. Oil realizations were about 95% of Brent crude before hedges, within the company’s guidance range, while operating costs totaled $347 million.
Adjusted EBITDAX was $338 million, operating cash flow before working capital was $300 million, and free cash flow before working capital was $151 million, according to Executive Vice President and Chief Financial Officer Clio Crespy.
General and administrative expenses declined nearly 9% from the prior period as a result of efficiencies tied to the Berry merger. CRC said it has implemented more than 100% of its 2026 Berry synergy target six months ahead of schedule, producing about $103 million in annualized savings.
The company now expects cumulative synergies and structural cost reductions of up to $470 million through 2028. Crespy said CRC has already delivered about $400 million of that total and described the remaining opportunities as structural improvements involving infrastructure, processing, transportation, power costs and capital efficiency.
CRC maintained its full-year net production target of approximately 153,000 BOE/d and its capital guidance range of $520 million to $560 million. Including its Uinta Basin operations, the company continues to expect about 1% entry-to-exit production growth for the year.
Efficiency Gains Reduce Rig and Maintenance Capital Needs
CRC said drilling and completion performance improved across its California operations. Time to market improved about 25%, allowing the company to complete more wells, sidetracks and workovers than planned. About 80% of wells drilled year to date have exceeded their type curves, with average initial production more than 10% above expectations.
The gains allowed CRC to move activity into the second quarter, resulting in $149 million of total capital spending. The company reduced its planned 2026 drilling, completion and workover capital by $10 million, though it redirected those savings toward targeted facilities investments and kept total capital guidance unchanged.
CRC now expects to operate an average of about five rigs in California during the second half of 2026, compared with six rigs in its earlier plan, while maintaining nearly flat gross entry-to-exit production. It expects to add a sixth rig at the start of 2027.
Leon said the company now believes California production can be maintained using six rigs on a normalized annual basis, one fewer than previously projected. CRC also expects drilling, completion and workover maintenance capital to be about 5% lower, with a normalized range of $450 million to $475 million.
In the Uinta Basin, CRC drilled four wells ahead of schedule and below planned drilling and completion costs. Crespy said the company expects all four wells to be online before the end of the year. However, she characterized Uinta as a non-core asset over the long term because it requires substantial capital, has higher capital intensity and operating costs, lower crude quality, steeper production declines and lower realizations than the company’s California assets.
Crimson Deal Aims to Expand Market Access
CRC announced an all-cash acquisition of Crimson’s roughly 2,000-mile California crude oil pipeline network. Leon said the pipeline system connects key CRC producing fields across multiple basins and will give the company more flexibility to transport its own and third-party volumes to higher-value California markets.
The transaction requires approval from the California Public Utilities Commission because some Crimson assets operate as common carriers. CRC said it received tentative approval without conditions and expects a final decision later in August.
CRC previously acquired Phillips 66’s Line 100 pipeline for a nominal amount. That transaction added approximately 120 miles of crude pipelines, more than 1 million barrels of storage capacity, and related gathering, transportation and truck-loading infrastructure in the Central Valley.
Crespy said the Crimson purchase was valued at approximately 4.4 times estimated 2027 EBITDA. She said CRC expects the acquisition to be accretive and sees value beyond pipeline cash flows through improved market access, commercial flexibility, realized pricing and integration opportunities.
The company faced temporary takeaway constraints during the quarter tied to marketing disputes and operational requirements. CRC built inventory of approximately 1,500 barrels of oil per day, which increased costs and pressured differentials. Crespy said the combined impact reduced second-quarter Adjusted EBITDAX and operating cash flow before working capital by roughly $25 million, or less than $2 per BOE, with about half related to inventory timing.
CRC sold the substantial majority of the inventory by the end of July. It expects third-quarter oil realizations of about 93% of Brent but said it does not view that figure as a long-term run rate. The company maintained its full-year oil realization expectation of about 94%, within its original 94% to 98% range.
Carbon Capture and Data Center Development Advance
CRC said it began carbon dioxide injection and generated first revenue at its Elk Hills carbon capture and sequestration project, which it described as California’s first commercial-scale CCS project. Leon said the project is capturing and injecting about 270 tons of CO2 per day and is targeting annualized capture and storage of about 100,000 tons.
The company is monitoring California’s Reliable and Clean Power Procurement Program as a potential market for natural gas generation paired with carbon capture. CRC sees a near-term opportunity to decarbonize approximately 2.4 gigawatts of power in the Central Valley through its carbon management platform.
Separately, CRC partnered with Beacon Data Centers to develop the proposed Golden Valley Technology Hub near Elk Hills. The planned 275-megawatt, 100-acre data center campus would use behind-the-meter power from CRC’s Elk Hills plant. Beacon will fund early-stage development, while CRC contributes industrial acreage, infrastructure, permitting experience and power assets.
CRC has submitted a conditional use permit and expects the environmental review process to advance later this year. Leon said the company is continuing discussions with global hyperscale data center operators while progressing commercial agreements, permitting, engineering and financing workstreams.
About California Resources (NYSE:CRC)
California Resources Corporation NYSE: CRC is an independent exploration and production company focused exclusively on developing oil and natural gas assets in California. Headquartered in Newport Beach, the company engages in hydraulic fracturing, well completions, reservoir management and enhanced recovery operations to produce crude oil, natural gas and natural gas liquids.
CRC's operations are concentrated in three core regions: the Los Angeles Basin, the Ventura Basin and the San Joaquin Basin.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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